Banking Current Affairs 2018
Welcome to Banking Current Affairs 2018 Section of GKToday. This section has current affairs on banking industry for IBPS Banking Recruitment, RBI Grade B, SBI PO, RRB and other banking examinations.
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The bi-annual Fiscal Stability Report discussing issues relating to the development and regulation of the financial sector has been released by the RBI. The Fiscal Stability Report reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to the financial stability of the country, as also the resilience of the financial system.
Findings of the Fiscal stability Report
The December 2018 report has made the following observations:
- Banking system’s asset quality has surprisingly started to show improvement. The gross non-performing assets (NPAs) have decelerated during September 2018 quarter.
- The asset quality of Scheduled Commercial Banks (SCB) showed an improvement with gross non-performing assets (GNPA) ratio declining from 11.5% in March 2018 to 10.8% in September 2018 and the net non-performing assets (NNPA) ratio has also registered a decline during the period.
- The number of banks with GNPA ratio less than 10% has gone down in September 2018 as compared to March 2018.
- Due to the withdrawal of various restructuring schemes the Restructured standard advances (RSAs) ratio steadily declined in September 2018 to 0.5%.
- The provision coverage ratio (PCR) of all SCBs was higher in September 2018 as compared to March 2018.
- The capital to risk-weighted assets ratio (CRAR) of SCBs has declined marginally from 13.8% in March 2018 to 13.7% in September 2018.
- Based on the Data, RBI predicts that projected GNPA ratio under the baseline scenario may decline from 10.8% in September 2018 to 10.3 per cent in March 2019.
- Analysis of portfolio of Micro, Small and Medium Enterprises (MSMEs) shows that, the performance of PSBs in the MSME segment trails that of other intermediaries (private banks and non-banking financial companies (NBFC)).
The findings of the report suggest that the worst case scenario is over for PSBs especially the ones who are not included in PCA framework and it is expected that the earnings may see some jump in upcoming quarters.
The new norms for the foreign direct investment (FDI) in e-commerce, bars e-commerce firms from selling products of entities in which they have an equity stake.
Why the new norms?
The new norms are brought in by the government to plug-in some loopholes like:
- To bypass the rules which restricted large sellers on platforms such as Flipkart and Amazon from contributing more than a quarter of sales, online retailers had set up structures to get around those loopholes by mandating other sellers to buy from those large sellers and then, in turn, sell those products on e-marketplaces.
- Large sellers formed multiple entities, which sold their products separately on online marketplaces.
- The small traders were complaining that deep discounts offered by the likes of Amazon and Flipkart are driving them out of business.
- The new norms aim to tackle the anti-competitive behaviour by e-commerce entities and to ensure that there is no wrong subsidization and the marketplace remains neutral to all vendors.
How will it affect e-commerce companies?
The impacts of the new norms are:
- The e-commerce companies like Amazon and Flipkart would be adversely affected because Amazon has several such joint ventures, including Cloudtail and Appario. Even Flipkart has exclusive partnerships with top smartphone brands such as Xiaomi and Oppo. The new norms will adversely impact their business models.
- The critics blame that the new norms are not in sync with the spirit of competition and free market economy because Only those exclusive arrangements that have an appreciable adverse effect on competition are prohibited under the Competition Act.
The new norms are welcomed by stating that the new norms will enable a level- playing field for all sellers especially MSMEs and help them leverage the reach of e-commerce.